Expat Tax USA

June 15th Has Come and Gone.  Now What?

First, make sure you don't miss the June 30th deadline for your 2008 FBAR Form. If you are mailing this from overseas you need to overnight it (Fed Ex, UPS, etc.) or it will be late. It must be received with original signatures on or before the 30th of June.  Ignored for decades, the IRS seems quite serious about it now.   Do a Google search for information dated 2008 and later.  An informative article can be found in the June-July 2008 edition of the Journal of Tax Practice & Procedure. You can also find good information in a publication put together by Freedom Press. (Google it).   Please note that the form was further modified in October 2008, so for the most up to date information you'll have to refine your search even further. (Then you'll need to refer to the IRS website to get the revised definition of US Person.)  Isn't this fun?

Second, if you didn't file an extension make an appointment with your tax professional to discuss your situation and to get advice. The news may not be as bad as you think, but it could be if you are noticed by the IRS first.  The Statute of Limitations does not start until you file.

There is a general misconception about the Foreign Earned Income and Housing Exclusions.  You must file your 1040 and report the income to exclude it.  If the IRS notices you first you can lose the ability to exclude.

If you filed an extension to October you shouldn't delay getting the information to your tax preparer if you haven't paid any estimated taxes for 2009 or the calculated the amount due for 2008.  Delay will be costly.

US Taxes are due in four quarters as you earn the money.  Don't make the mistake of not making estimated payments.

Singapore has very low tax rates.  If you earn over the exclusion you will likely still have a US tax obligation even with foreign tax credits.  China and Indonesia have high tax rates and generally wipe out much of the taxes due.

These are generalizations of course.

Offshore Settlement Offer:  Now thru September 23, 2009

To quote Dr. Seuss:  "The time has come the time is now" if you have been hiding out...  Seriously, if you haven't been filing and/or reporting foreign bank accounts and you want to come forward you can save yourself criminal prosecution and considerable trouble by availing yourself of the Offshore Settlment Offer.  You can find the details at www.irs.gov.  I am happy to discuss with you, but I would advise that you hire the services of a tax attorney stateside prior to disclosing information to me or any tax preparer as we cannot protect your information from the IRS.

Hiring the Right Person 

The United States tax code, specifically its treatment of foreign-earned income, is complex and confounding to the untrained tax preparer.  You need a tax preparer conversant with the current tax code and trends that specifically effect , American citizens living abroad, permanent residents of the U.S.,  U.S. military stationed abroad, and others with U.S.-connected income.   

You could be overpaying or underpaying your taxes if you aren't careful.  If you are a first-time overseas filer, this is especially true as there are many special time tests and first year elections that will effect your future tax filings. 

Don't let your accountant from home guess his way through your taxes.  Hire a preparer with expertise in these types of returns.  If you aren't sure, ask your previous tax preparer  if they have experience with forms 2555 and 1116.  If they say no, you should not pay them to prepare your taxes.  It just makes the most sense to have an expat tax preparer prepare your expat taxes.  If you typically self-file, ask yourself if you are willing to devote the time to learn.  If you just need some help, contact me to arrange a DIY session. 

Let me take the guess work out of your tax returns. I am a graduate of Tulane School of Law, licensed to practice law in the State of Colorado, and a former Officer in the United States Naval JAG Corps. I am not offering my services as a "tax attorney" but rather as a tax preparer. 

A quick word about penalties:

The failure to file penalty is the harshest and you risk criminal action and denial of the ability to take the exclusions.

File even if you can't pay.

Failure to pay isn't as bad but you should be aware that if you owe more than $50,000 the IRS can and likley will seize your assets in the U.S.

The interest rates that the IRS charges you for unpaid balances varies each quarter.  It has been set at 4% for the first two quarters of 2009.

Hightlights of my services:

• Tax Returns and Notice Response 
• Estimated tax payments (1040-ES)
• Assistance with all types of Extensions 
• 1040/1040NR and all associated forms
• Most State Filings
• Consultation on US tax implications and reporting requirements when establishing a small business in Singapore  (In association with Kim Johnson, CPA (California) KRJ Business Solutions, based in Singapore.)
• Local (Singaporean) Tax work (referred to a local accountant) 
• Assistance with FBAR filings

Email me at Amanda@expattaxusa.com for a copy of the 2008 Checklist and Engagement Letter

As the taxpayer you are responsible for the contents of your filed return.  Before you sign your return you should be able to review it with your tax preparer.  If they are unwilling to do so, you should take your work elsewhere.  Pay attention to the details.  For example, Schedule B has a yes/no block asking if you have foreign bank accounts.  Be sure you have answered this question appropriately.

There are new preparer penalities and disclosures required by the IRS.  For this reason, you may be asked to provide more substantiation of your information and to sign more documents at the beginning of your engagement.  Please be sure to keep accurate records for seven years in the event you are called upon to furnish the source documents.  This includes all your bank statements from your foreign banks.

Important Links:

The Internation Revenue Service's website provides valuable information to all taxpayers.  Of particular interest to international filers is the International Tax Gap Series at www.irs.gov.

Military Filers should review the IRS website for important information, including information on free filing assistance.